Dropbox cuts over 500 jobs in its second layoff in two years
Dropbox has announced it will cut approximately 20% of its workforce, amounting to 528 positions, marking the company's second wave of layoffs in under two years. CEO Drew Houston acknowledged the difficult decision, stating that while some parts of the business are thriving, others have over-invested or underperformed.
“I’m truly sorry to those impacted by this change," the CEO wrote in his email. "To everyone leaving Dropbox, I’m deeply grateful for everything you've done for our company and our customers.”
The layoffs come amid a transitional phase for Dropbox. As its core File Sync and Share (FSS) business matures, the company has been pivoting toward new growth initiatives, including its AI-powered search tool, Dash, developed in collaboration with Nvidia. Houston explained that macroeconomic headwinds and declining demand in Dropbox’s core business areas have made the current business structure unsustainable.
In addition to market pressures, internal challenges have played a role in the layoffs. “We’ve heard from many of you that our organizational structure has become overly complex, with excess layers of management slowing us down,” Houston stated. The company plans to flatten its structure, focusing on areas where it is either over-invested or underperforming.
The restructuring is expected to cost Dropbox between $63 million and $68 million, primarily due to severance, equity, and transitional payments. Departing employees will receive a minimum of 16 weeks’ pay and retain their Q4 2024 equity vesting. To further support impacted staff, Dropbox has arranged career coaching and job placement services and has allowed those leaving to keep their company devices for personal use.
Recent financial reports show Dropbox has maintained profitability, but revenue growth has slowed to under 2%, reaching $634.5 million. Still, the company has invested heavily in stock repurchases in a move to boost its share price. In the first half of this year alone, Dropbox allocated $540 million to buy back shares, with an additional $868 million available for future buybacks as of June 30.
Following the layoffs, Dropbox's focus will now be on consolidating its core business while seizing emerging opportunities in AI.
